AAAS R&D Funding Update on FY 2007 Appropriations

The federal government’s fiscal year (FY) 2007 began on October 1, but lawmakers are still a long way from finishing the FY 2007 budget. Only the Departments of Defense (DOD) and Homeland Security (DHS) have their final budgets; all other federal agencies must wait until after the November elections for Congress to finalize the remaining appropriations bills. Although Congress has so far endorsed the large proposed increases for select physical sciences funding agencies in the President’s American Competitiveness Initiative, these and other increases for federal research and development (R&D) programs are on hold for the next several weeks and may not survive in the upcoming lame-duck congressional session.

Even if Congress approves all the proposed increases for selected research programs, offsetting cuts in other research programs mean that the federal investment in basic and applied research is almost certain to fall in FY 2007 within a stagnant domestic budget (see Figure 1). But the total federal research and development (R&D) portfolio is a different matter; because the rapidly growing defense budget allows for substantial increases in DOD weapons development to an all-time high, the total federal R&D portfolio will increase in FY 2007.

Figure 1. (click on image for PDF)

Highlights So Far of Federal R&D in FY 2007 Appropriations

Although Congress made a good start on FY 2007 appropriations this summer, action ground almost to a halt in September. Although both the House and the Senate drafted their respective versions of all the FY 2007 appropriations bills before a month-long August recess, in September congressional appropriators were able to finalize only 2 of the 11 bills before the October 1 start of FY 2007.

The Department of Defense (DOD) and the Department of Homeland Security (DHS) have their final budgets, but the remaining R&D funding agencies are in the now-familiar situation of waiting for their final budgets well into the new fiscal year. Before leaving Washington, Congress approved a continuing resolution (CR; temporary appropriations bill) through November 17 allowing federal programs to keep spending money in the new fiscal year at the lower of the FY 2006 or FY 2007 House spending levels. Thus, even R&D programs slated for large increases in 2007 must operate at flat funding levels for at least the next six weeks, while R&D programs slated for steep cuts find their operating funds reduced sharply.

- Although Congress has so far supported the President’s American Competitiveness Initiative (ACI), increases for its three key physical sciences agencies are on hold until later in the fall. The National Science Foundation (NSF; up 8.3 percent to $4.5 billion), the Department of Energy’s Office of Science (DOE OS; up 15.3 percent to $3.8 billion), and Commerce’s National Institute of Standards and Technology laboratories (NIST; up 20 percent to $377 million) would so far all receive the full requested increases for their R&D programs (see Table 1), but Congress could chisel away at these increases in November in order to shift funds to other programs.

Figure 2. (click on image for PDF)

- Even if the large ACI increases become final, the federal investment in basic and applied research is almost certain to fall in FY 2007. The total federal investment in research stands at $56.2 billion in appropriations so far (see Table 2 and Figure 1), a 0.9 percent or $498 million cut. Increases in research funding by the ACI agencies would be more than offset by steep cuts in other research agencies.

- Congress would boost the federal investment in development to an all-time high. Development funding would climb 7.0 percent or $5.2 billion to $79.4 billion (see Table 1 and Figure 2), continuing multi-billion dollar increases in each of the last six years. Nearly all development funding comes from the Department of Defense (DOD) for new weapons systems. DOD development funding for missile defense technologies and new aerospace weapons would climb dramatically in the recently finalized FY 2007 DOD budget. Also, Congress has so far supported the Administration’s proposal to boost National Aeronautics and Space Administration’s R&D funding by $858 million or 7.6 percent to $12.2 billion; all of the increase and more would go to development efforts for the next generation of human space vehicles, leaving NASA research funding in steep decline.

- A cut in federal investments in “R” (research) combined with a large increase in “D” (development) would help the total federal investment in R&D reach $140 billion in FY 2007, a 3.5 percent increase (see Table 1) based on appropriations actions so far. Support for R&D facilities and major equipment would drop 0.2 percent to $4.4 billion. While a still-increasing defense budget would help defense R&D gain 4.5 percent to exceed $80 billion for the first time to $81.2 billion (see Table 1), a flat overall domestic budget would keep nondefense R&D flat in real terms with a 2.0 percent increase to $58.8 billion. Defense R&D would make up 58 percent of the federal R&D portfolio, a ratio not seen since the height of the Cold War in 1991 (see Table 3).

- The slight increase for nondefense R&D would go almost entirely for NASA’s spacecraft development. While space-related R&D would gain nearly $1 billion or 8.8 percent (to $11.3 billion), nondefense R&D excluding space would barely gain despite big increases for the three agencies included in the American Competitiveness Initiative, because of cuts in other parts of the portfolio (see Table 3). The ACI boosts make up the large increases for general science R&D (up 11 percent to $8.4 billion) and commerce R&D (up 6.4 percent), while justice, agriculture, transportation, health, and natural resources/environment R&D would all decline in pending appropriations.

Figure 3. (click on the image for PDF)

- If the latest draft appropriations become final, the National Institutes of Health (NIH) budget would decline for the second year in a row to $28.5 billion; all but three of NIH’s institutes and centers (IC’s) would see their budgets shrink for the second year in a row (see Figure 3). After adjusting for inflation, NIH support of biomedical research could decline for the third year in a row (see Figure 2). NIH is currently facing a 0.3 percent cut in its budget and its R&D portfolio, but NIH is in a particularly vulnerable situation because its appropriations bill is the furthest from completion and because other programs in its bill face steep cuts. Later this year, there is a strong possibility that Congress may shift funds from NIH to other domestic programs in order to produce an appropriations bill that can be signed into law.

- Many agencies face uncertain prospects in final FY 2007 appropriations because of big differences between House and Senate-proposed funding levels. The National Oceanic and Atmospheric Administration (NOAA) faces a 18 percent cut in the House-approved Commerce budget (see Table 1 and Figure 3), but the Senate would give the agency a 26 percent increase; in the meantime, NOAA has to operate at the House-proposed funding level. The Environmental Protection Agency’s (EPA) R&D portfolio would increase in the House plan but decline in the Senate. The Department of Energy’s (DOE) energy R&D programs are likely to get an increase, but the difference between the House’s 8 percent boost and the Senate’s 22 percent boost is considerable, especially at the level of individual energy programs.

R&D Appropriations for Key Agencies

Full information on FY 2007 House and Senate appropriations and program details for individual agencies are available in AAAS R&D Funding Updates on the AAAS R&D Web site. This update focuses only on DOD and DHS appropriations which have been finalized since the most recent August summary report. For summaries of the other R&D funding agencies, see the August summary report or individual agency profiles on the AAAS R&D web site.

- With just days to go before the October 1 start of FY 2007, Congress finalized a Department of Defense (DOD) budget that contains a record-breaking $76.8 billion for DOD’s research and development (R&D) spending (see Table 1). Nearly the entire $3.5 billion or 4.8 percent increase would go to weapons development programs. Once again, Congress would reverse sharp proposed cuts in DOD’s “Science and Technology” (S&T) investments. Instead of a greater than 20 percent requested cut, DOD S&T spending would remain near the 2006 funding level at $13.6 billion, $2.4 billion more than the request (see Table 1). Basic research (“6.1”) would climb 4.8 percent to $1.5 billion (see Table 2), while applied research (“6.2”) would increase 0.8 percent to $5.2 billion. The research-oriented Defense Advanced Research Projects Agency (DARPA) would see its budget increase 1.4 percent to $3.0 billion. The Air Force and the Missile Defense Agency (MDA) would be the big winners in weapons development funding (up 6.2 percent to $63.1 billion). Air Force R&D would climb 10.7 percent to $24.4 billion, while MDA development would surge 22.1 percent to $9.4 billion after a steep cut in 2006.

- Congress recently finalized an FY 2007 Homeland Security appropriations bill that would cut the Department of Homeland Security’s (DHS) R&D funding for the first time in the department’s young history. DHS R&D would fall 22 percent to $1.0 billion even as the total DHS budget would keep increasing. Funding for most DHS R&D activities would decline. Only DHS R&D activities in cybersecurity, interoperable communications, and radiological and nuclear countermeasures would receive increases in 2007. The radiological and nuclear countermeasures R&D portfolio would receive a significant increase as part of its move from the Science and Technology directorate to a separate Domestic Nuclear Detection Office (DNDO) in 2007. Congress boosts DNDO R&D from $209 million within S&T to $273 million, a boost of 31 percent. But congressional dissatisfaction over DHS management continues to grow. The final DHS budget withholds $65 million in 2007 R&D funds (and an additional $60 million in management funds) until DHS provides Congress with detailed reports on financial management and performance measures. The bill also rescinds $125 million in previously appropriated R&D funds that DHS has not spent yet. University and Fellowship Programs funding would drop $12 million to $50 million in 2007. The final DHS bill leaves out a Senate provision limiting DHS university centers to three years of federal support.

Budget Outlook: More Delays, Omnibus Bill Looms

Congress is not scheduled to return to Washington until a week after the November 7 midterm elections. Although the current continuing resolution runs only through November 17, the experience of past lame-duck sessions indicates that lawmakers will need to pass one or more additional CRs to give themselves enough time to wrap up both the FY 2007 budget and the 109^th Congress. The last lame-duck session, for the 108^th Congress in fall 2004, extended through December 8 to finalize all of that year’s appropriations bills. Back then, in a frenzy of closed-door negotiations, congressional leaders bundled 9 of the then-13 appropriations bills into an omnibus appropriations bill. Although congressional appropriators have struggled mightily to avoid an omnibus, and succeeded in approving all 11 appropriations bills individually last year (though at the cost of delaying final action on FY 2006 appropriations until December 30), this year they may be forced to resort to another omnibus by the daunting task of negotiating final versions of 9 appropriations bills, none of which the full Senate has approved or even debated, and then shepherding them through the legislative process. An omnibus bill would allow congressional leaders to bypass Senate debate on 9 individual bills and go directly to a final bill that can be debated and approved in as little as one day. Getting there, however, could still be a long process because of the thousands of program-level spending levels that have to be decided, all of which combined have to fit under restrictive domestic spending targets.

As a result of all the budget work left unfinished, most R&D funding agencies are in the now-familiar situation of going two, three, or even more months into a new fiscal year without a final budget. For the U.S. science and engineering community, the longer the delays, the more likely it is that proposed funding increases for R&D programs will get chiseled away and transferred to other programs.

(This analysis is one of a series of AAAS R&D Funding Updates on FY 2007 congressional appropriations. The complete series of AAAS R&D Funding Updates, including continually updated analyses of R&D in FY 2007 appropriations, is available on the AAAS R&D Web Site (http://www.aaas.org/spp/rd) in the “FY 2007 R&D” or the “What’s New” sections.)

- October 4, 2006
AAAS R&D Budget and Policy Program
1200 New York Ave, NW
Washington, DC 20005
(202) 326-6607
science_policy@aaas.org
http://www.aaas.org/spp/rd

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